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Vonage Holdings Corp (NYSE:VG)
Beneish M-Score
-3.10 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

Vonage Holdings Corp has a M-score of -3.10 suggests that the company is not a manipulator.

VG' s 10-Year Beneish M-Score Range
Min: -5.9   Max: 0.99
Current: -3.1

-5.9
0.99

During the past 13 years, the highest Beneish M-Score of Vonage Holdings Corp was 0.99. The lowest was -5.90. And the median was -3.04.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of Vonage Holdings Corp for today is based on a combination of the following eight different indices:

M=-4.84+0.92 * DSRI+0.528 * GMI+0.404 * AQI+0.892 * SGI+0.115 * DEPI
=-4.84+0.92 * 0.9658+0.528 * 0.9665+0.404 * 1.1684+0.892 * 1.0409+0.115 * 0.869
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0775+4.679 * -0.1334-0.327 * 1.0793
=-3.10

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $22.0 Mil.
Revenue was 214.737 + 218.882 + 220.733 + 211.22 = $865.6 Mil.
Gross Profit was 155.702 + 157.047 + 158.377 + 149.142 = $620.3 Mil.
Total Current Assets was $132.7 Mil.
Total Assets was $592.6 Mil.
Property, Plant and Equipment(Net PPE) was $43.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $48.6 Mil.
Selling, General & Admin. Expense(SGA) was $531.1 Mil.
Total Current Liabilities was $176.1 Mil.
Long-Term Debt was $82.7 Mil.
Net Income was 4.556 + 5.518 + 4.588 + 3.588 = $18.3 Mil.
Non Operating Income was -0.002 + 0.036 + -0.013 + -0.033 = $-0.0 Mil.
Cash Flow from Operations was 27.764 + 24.082 + 9.387 + 36.089 = $97.3 Mil.
Accounts Receivable was $21.9 Mil.
Revenue was 203.984 + 204.776 + 209.087 + 213.711 = $831.6 Mil.
Gross Profit was 141.567 + 142.032 + 145.028 + 147.329 = $576.0 Mil.
Total Current Assets was $174.6 Mil.
Total Assets was $535.0 Mil.
Property, Plant and Equipment(Net PPE) was $38.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $32.7 Mil.
Selling, General & Admin. Expense(SGA) was $473.5 Mil.
Total Current Liabilities was $176.3 Mil.
Long-Term Debt was $40.1 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(22.048 / 865.572) / (21.932 / 831.558)
=0.02547217 / 0.02637459
=0.9658

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(157.047 / 831.558) / (155.702 / 865.572)
=0.69262276 / 0.71659897
=0.9665

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (132.724 + 43.771) / 592.637) / (1 - (174.637 + 38.834) / 534.986)
=0.702187 / 0.60097834
=1.1684

4. SGI = Sales Growth Index

Ratio of sales in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=865.572 / 831.558
=1.0409

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI=(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1)) / (Depreciation_t / (Depreciaton_t + PPE_t))
=(32.691 / (32.691 + 38.834)) / (48.57 / (48.57 + 43.771))
=0.45705697 / 0.52598521
=0.869

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI=(SGA_t / Sales_t) / (SGA_t-1 /Sales_t-1)
=(531.087 / 865.572) / (473.537 / 831.558)
=0.61356768 / 0.56945757
=1.0775

7. LVGI = Leverage Index

The ratio of total debt to total assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((82.732 + 176.051) / 592.637) / ((40.139 + 176.315) / 534.986)
=0.43666359 / 0.4045975
=1.0793

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(18.25 - -0.012 - 97.322) / 592.637
=-0.1334

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

Vonage Holdings Corp has a M-score of -3.10 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Vonage Holdings Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.81690.98620.89120.80990.86121.01481.19451.17150.9857
GMI 0.8781.0160.84320.950.97221.02740.97150.99980.977
AQI 2.5940.81843.2811.49660.98070.61972.9950.90571.1338
SGI 3.37732.25631.36361.08680.98770.99550.98340.97560.9764
DEPI 2.06750.6030.64170.72750.94130.90921.15650.99360.8694
SGAI 1.11990.71040.8570.68150.90440.891.02121.06211.1017
LVGI 2.62510.78091.43771.12750.99851.28070.31630.87971.1523
TATA -0.1592-0.19730.0081-0.1021-0.1147-0.68560.4862-0.152-0.0931
M-score -1.12-2.28-1.54-2.90-3.17-5.900.99-3.07-2.99

Vonage Holdings Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.0981.29171.17151.27981.24171.00360.98570.94720.91030.9658
GMI 0.99741.00230.99980.98830.9810.97970.9770.97710.97310.9665
AQI 2.72442.45230.90570.87320.91910.96831.13381.23251.23451.1684
SGI 0.98870.97570.97560.97220.97110.9770.97640.99811.02351.0409
DEPI 1.08181.00650.99360.95880.99460.8220.86940.79050.72980.869
SGAI 1.04381.05321.06211.04611.05591.07741.10171.1261.10971.0775
LVGI 0.31880.31610.87970.95870.98631.04081.15231.04711.04511.0793
TATA 0.47530.5149-0.152-0.1506-0.1119-0.1413-0.0931-0.1139-0.1269-0.1334
M-score 0.740.98-3.07-3.01-2.86-3.23-2.99-3.04-3.12-3.10
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